Idea's Himanshu Kapania leads race to run merged Vodafone entity

“It’s only logical that Kapania should be heading it (the merged telco),” one of the people with direct knowledge of the matter, said.Baiju Kalesh&Devina Sengupta | ET Bureau | July 01, 2017, 10:18 IST

Himanshu Kapania, the managing director of Idea Cellular, is believed to have emerged the frontrunner to head what would be India’s largest telco formed out of the ongoing merger between India’s No. 3 carrier and second ranked Vodafone India, two people familiar with the matter said.

“It’s only logical that Kapania should be heading it (the merged telco),” one of the people with direct knowledge of the matter, said. “The formal decision though hasn’t been taken. There’s enough time left (for the merger).”

While the Aditya Birla Group, whose chairman Kumar Mangalam Birla has already been named chairman of the merged telco, declined to comment, Vodafone, in an emailed statement, denied that Kapania will be the CEO of the merged entity.

“We categorically deny your speculation that Mr Himanshu Kapania will be the CEO of the entity formed post the merger of Idea Cellular and Vodafone India, and dismiss it as completely baseless, unfounded and unwarranted,” Vodafone said.

“In the press meet held on March 20, 2017 to announce the merger, it was announced that Mr. Birla will be the chairman and the CFO position will be with Vodafone. It was also stated, repeatedly emphasised and clarified multiple times during the press meet that the CEO and COO of the merged entity will be announced prior to completion of the merger, which is expected in calendar year 2018. Further, both Mr. Birla and Mr. Colao had in person met and addressed all your queries regarding this,” the release added. The telco added that there is no change in stance.

UK’s Vodafone Group and India’s diversified Aditya Birla Group are in the process of merging their local telecom units – Vodafone India and Idea – with equal ownership to create India's largest mobile phone company with about 400 million customers, 35% customer market share and 41% revenue market share. Once completed in mid-2018, the merged company would be stronger placed to take on the severe competitive pressures triggered by the entry of Reliance Jio.

Besides the decisions on the top executives, the two companies agreed that promoters of Idea and Vodafone will have the right to nominate three directors each on the board of the combined entity which will be comprised of 12 directors, six of whom will be independent. The names of the rest of the management team are still being decided, one of the people said. The merger is currently awaiting clearance from various authorities such as markets regulator Sebi and the Competition Commission of India.

If Kapania does take charge of the merged company, he will have his task cut out to deal with falling revenue and profits amid intense price competition. Kapania has been among the most vocal as the industry sought sops from the government to tide over the financial mess with debt rising to nearly Rs 5 lakh crore, and fear of loan defaults rose as cash flows dried up.